of expulsion can be exercised unless expressly conferred by the char

ter.

"The 65th, 66th and 67th by-laws enact that 'if the conduct of a member be disorderly, or injurious to the interest of the club, or contrary to its by-laws, he shall be requested to resign, and if the request be disregarded, the board shall refer the matter to the next stated meeting of the club, and at such meeting the circumstances of the case shall be considered, and the member may be expelled.'

"The relator became a member of the club in 1848, and it is not alleged that he has failed to pay any of his dues, or perform any of his duties to the club, but the return alleges that on 'the evening of the 24th of February, 1863, the defendant was guilty of breaking the 65th by-law by having an altercation within the walls of the clubhouse with Samuel B. Thomas, and by striking him a blow.' For this he was expelled. * *

"It is not alleged that the relator is a quarrelsome person or habitually disorderly. On the contrary, it was admitted in argument that he is a respectable gentleman, and it is shown that when the offense occurred he was sitting in the bar-room of the club-house in quiet and friendly conversation with another person, when Thomas entered and uttered defamatory words which the relator understood to be applied to himself. It was therefore an assault upon Thomas, provoked by himself. It was not an interruption of any deliberations or proceedings of the club in a state of organization-it occurred not in a readingroom, or an eating-room, nor at a card or billiard table, but in what is called the office or bar-room of the house.

"I look upon the occurrence as disorderly and injurious to the interest of the club, within the meaning of the 65th by-law, but as one of those 'minor offenses,' of which Mr. Willcock speaks, and for which a majority have no power, even under the by-laws, to disfranchise a member. And upon the doctrine of the cases I have referred to, I hold the by-law void so far as it inflicts this extreme penalty for such an offense. I would be very sorry to say that anything short of a statute could confer on a majority of the members of any corporation power to expel a fellow-member for merely disorderly conduct. *

*

*

"But what is conclusive of this case is, that the corporation possesses property, real and personal, and is at liberty to accumulate more, until an annual revenue of $3,000 comes to be enjoyed; and 'the relator has purchased and paid for the right to participate in that franchise. It is not a joint stock company at present, for under its by-laws no pecuniary profits are divisible among the members, but it may become so, and whether it does or not, the relator has a vested interest in its estate, and can not be deprived of it by the proceedings that were had against him. On this point the authorities are clear, and without conflict. Nothing but an express power in the charter can authorize a money corporation to throw overboard one of its members. I have shown that the act of incorporation contained no such power. On the contrary, it excluded it, for the proviso reads 'that nothing herein contained shall be so construed as to authorize

8355

RIGHT TO MAKE BY-LAWS.

said Philadelphia Association and Reading-Room to do any other act or acts in their corporate capacity than are herein expressed.'

"For these reasons a peremptory mandamus must be awarded.” Affirmed by an equal division of the court in banc.

Note. As to right to provide by by-laws for expulsion of members, see, 1810, Commonwealth v. St. Patrick's Soc., 2 Binney (Pa.) 441, 4 Am. Dec. 453; 1821, Delacy v. Neuse River Nav. Co., 1 Hawks (N. C.) 274, 9 Am. Dec. 636; 1836, In re Phil. Sav. Inst., 1 Whart. (Pa.) 461, 30 Am. Dec. 226; 1836, Black, etc., Soc. v. Vandyke, 2 Whart. 312, 30 Am. Dec. 263; 1857, Austin v. Searing, 16 N. Y. 112, 69 Am. Dec. 665, note 671; 1866, Society, etc., v. Commonwealth, 52 Pa. St. 125, 91 Am. Dec. 139; 1869, State v. Georgia Med. Soc., 38 Ga. 608, 95 Am. Dec. 408, supra, p. 136, note 140; 1871, Dickenson v. Chamber of Com., 29 Wis. 45, 9 Am. Rep. 544; 1872, Gregg v. Massachusetts M. Soc., 111 Mass. 185, 15 Am. Rep. 24, note 27; 1888, Otto v. Journeyman, etc., Union, 75 Cal. 308, 7 Am. St. Rep. 156, note 160; 1890, Connelly v. Masonic, etc., Ben. Ass'n, 58 Conn. 552, 18 Am. St. Rep. 296; 1890, Commonwealth v. Union League, 135 Pa. St. 301, 20 Am. St. Rep. 870; 1891, Huston v. Reutlinger, 91 Ky. 333, 34 Am. St. Rep. 225; 1892, Am. Live Stock Co. v. Chicago L. S. Ex., 143 Ill. 210, 36 Am. St. Rep. 385, supra, p. 682; 1895, Ryan v. Cudahy, 157 Ill. 108, 48 Am. St. Rep. 305; 1896, Jackson v. South Omaha L. S. Ex., 49 Neb. 687; 1896, Board of Trade of Chicago v. Nelson, 162 Ill. 431, 53 Am. St. Rep. 312; 1897, Robinson v. Templar Lodge, 117 Cal. 370, 59 Am. St. Rep. 193, note 201; 1899, Weiss v. Musical, etc., Union, 189 Pa. St. 446, 69 Am. St. Rep. 820.

Mandamus is the proper remedy to reinstate: 1821, Delacy v. Neuse Riv. Nav. Co., 1 Hawks (N. C.) 274, 9 Am. Dec. 636; 1836, Black, etc., Soc. v. Vandyke, 2 Whart. (Pa.) 312, 30 Am. Dec. 263; 1869, State v. Georgia Med. Soc., 38 Ga. 608, 95 Am. Dec. 408, supra, 136; 1888, Otto v. Journeyman Tailors', etc., Union, 75 Cal. 308, 7 Am. St. Rep. 156; 1897, Robinson v. Templar Lodge, 117 Cal. 370, 59 Am. St. Rep. 193, note 201; 1899, Weiss v. Musical, etc., Union, 189 Pa. St. 446, 69 Am. St. Rep. 820.

The courts, however, will not generally interfere, unless there are property rights involved, or for the purpose, and to the extent only, of ascertaining that the proceedings were according to the rules and regulations, carried on in good faith, and not in violation of the law of the land: 1857, Austin v. Searing, 16 N. Y. 112, 69 Am. Dec. 665, note 671; 1877, Illinois, etc., Soc. v. Baldwin, 86 Ill. 479; 1888, Otto v. Journeyman Tailors' Union, 75 Cal. 308, 7 Am. St. Rep. 156, note 160; 1890, Lewis v. Wilson, 121 N. Y. 284; 1890, Connelly v. Masonic M. B. Ass'n, 58 Conn. 552, 18 Am. St. Rep. 296, note 201; 1895, Ryan v. Cudahy, 157 Ill. 108, 48 Am. St. Rep. 305; 1896, People v. N. Y., etc., Exch., 149 N. Y. 401.

Sec. 355. 3. Validity of by-laws in general.

THE PEOPLE v. THE CHICAGO LIVE STOCK EXCHANGE.1

1897. IN THE SUPREME COURT OF ILLINOIS. 170 Ill. 556-571, 62 Am. St. Rep. 404.

[Petition for leave to file information in nature of quo warranto against the Live Stock Exchange, for assuming to enact and attempting to enforce without authority, a by-law prohibiting members from employing trade solicitors not members of the association, limiting 1 Statement of facts abridged. Arguments and part of opinion omitted.

the number of solicitors which may be employed by members in certain states, and providing that such solicitors must be paid a fixed salary, and not allowed to work on commission. It was claimed the by-law was in restraint of trade, and interfered with the legal rights of the members. The lower court held it valid, and denied the application. Appeal was taken from this judgment.]

PHILLIPS, C. J. *** The common law refused to recognize restrictions upon trade and business among the citizens of a common country. Under this rule of the common law the right of the laborer to dispose of his skill and industry, and to contract in reference to the same with whom he pleased and at such contract rates as might be agreed on, was recognized and not allowed to be trammeled with restrictions which interfered with individual action and liberty. Combinations and associations of men have no right to place restrictions upon the right of an individual to contract and engage in business, employing such means and agencies as are not prohibited by law. The natural flow of trade and commerce must be unrestricted, and men engaged therein may accelerate its current by all means not unlawful. To this end men engaged in trade and commerce may advertise, employ men to solicit business and offer rewards and inducements to secure trade without violating the law of the land, and in so doing are exercising a right which is in the interest of the public, because competition can not be hostile to public interests. Efforts to prevent competition and to restrict individual efforts and freedom of action in trade and commerce are restrictions hostile to the public welfare, not consonant with the spirit of our institutions and in violation of law.

In Rex v. Wardens of the Coopers' Co., 7 T. R. 543, it was held that a by-law limiting the number of apprentices which any member of the company might take was void. In the case of Tailors of Ipswich, 11 Coke 53, a corporation known as the Tailors of Ipswich enacted a by-law to prohibit any tailor from exercising his trade until he had presented himself before the corporation and proved that he had served seven years as an apprentice. This by-law was held void, as being in restraint of trade. See, also, Gunmakers' Society v. Fell, Willes 384. Sustaining the same propositions are Stanton v. Allen, 5 Denio 434; People v. Fisher, 14 Wend. 9; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173; People, ex rel., v. Medical Society of Erie, 24 Barb. 570.

A case similar to that now under consideration was before the court of appeals of Kentucky in Huston v. Reutlinger, 15 S. W. Rep. 857. There the Louisville Board of Underwriters passed a by-law which, among other things, prohibited local companies from employing more than one solicitor, and regulated the manner in which the salary of such solicitor was to be paid. For a violation of this bylaw the offending member of the board would forfeit all rights as a member of the association. A local company which had employed more than one solicitor sought to enjoin the enforcement of the forfeiture on the ground that the association had no authority to control the members in the employment of solicitors, etc. A decree was en

tered in accordance with the prayer of the bill, which, on appeal, was affirmed, the court saying: "The majority of the members, under the guise of producing harmony in this business association, have taken from their individual members the right to determine how many men they shall employ in their private business, and then only such as the association may think fit for the position. Nor can they employ a solicitor for a less period than six months, or offer a solicitor employment within twelve months after the solicitor has severed his connection with any member; are compelled to discharge those in their employ if they have more than one; and, if these by-laws are enforced, have placed their business under the control of the majority vote of the association-a power the exercise of which was not given by the fundamental law of the order, and doubtless not contemplated when the association was formed. * * The common law rule, recognized and adopted when business relations were not so multiplied and extensive as now and when less necessity existed for enforcing it, condemned all such restrictions upon trade and business intercourse with men as is found to exist in this case. The right of one to control his own property as he pleases, and to employ those necessary to aid him in his business upon such terms as may be agreed upon, when not in violation of the law of the land, is the rule of the common law, and the right of the laborer to dispose of his skill and industry to whom he pleases and for the price agreed on is embraced within the same rule. In all classes of business the employer and employee should be allowed to contract with each other unrestrained by others who may demand that the one shall give more or the other receive less, and, as a general rule, when restrictions are placed upon their rights by combinations or associations of men, they will be regarded as in violation of law, and void."

When a corporation is created there goes with it the power to enact by-laws for its government and guidance as well as for the guidance and government of its members. This power is necessary to enable a corporation to accomplish the purpose of its creation. But by-laws must be reasonable and for a corporate purpose, and always within charter limits. They must always be strictly subordinate to the constitution and the general law of the land. They must not infringe the policy of the state nor be hostile to public welfare. The by-law in this case is a restriction on freedom of trade and business. It· trammels competition and prohibits an individual from contracting and engaging in business, and from using such agencies and means he may desire not hostile to general law. It is not required for corporate purposes, nor is it included within the purposes declared in the certificate of incorporation. It is, therefore, unlawful, as this corporation had no right to exercise this power of enacting it under its franchise.

*

Petition should have been granted.

Reversed and remanded.

Note. Validity of by-laws in general: They must be reasonable, not violate charter, statute or common law rules, operate uniformly and not be in re

straint of trade: 1837, Matter of L. I. R., 19 Wend. 37, 32 Am. Dec. 429; 1848, Palmetto Lodge v. Hubbell, 2 Strob. (S. C.) 457, 49 Am. Dec. 604; 1854, State v. Overton, 4 Zabr. (N. J.) 435, 61 Am. Dec. 671; 1863, Sayre v. Louisville Benev. Assn., 1 Duvall (Ky.) 143, 85 Am. Dec. 613, note 617; 1887, Budd v. Multnomah St. R. Co., 15 Ore. 413, 3 Am. St. Rep. 169, infra, p. 1569; 1892 Am. Live Stock Co. v. Chicago L. S. Ex., 143 Ill. 210, 36 Am. St. Rep. 385; 1895, Durkee v. People, 155 Ill. 354, 46 Am. St. Rep. 340; 1897, McNulta v. Corn Belt Bank, 164 Ill. 427, 56 Am. St. Rep. 203; 1897, People v. Chicago, etc., Exchange, 170 Ill. 556, 62 Am. St. Rep. 404, supra, p. 1171; 1897, Wells v. Black, 117 Cal. 157, 59 Am. St. Rep. 162; 1897, King v. Internat'l Bldg. Union, 170 Ill. 135, 7 Am. & E. C. C. (N. S.) 526; 1899, Northport, etc., Assn. v. Perkins, 93 Maine 235, 74 Am. St. Rep. 342; 1899, Herring v. Ruskin Co-op. Assn., Tenn. Ch. App.- 52 S. W. Rep. 327; 1899, Bailey v. Assn. of

Master Plumbers, 103 Tenn. 99, 46 L. R. A. 561.

But if they are authorized by the charter, the courts can not set them aside as unreasonable: 1899, Burden v. Burden, 159 N. Y. 287.

By-laws can not modify vested rights arising under contracts, change terms as to dividends, increase or decrease liability of shareholders, or enlarge corporate powers: 1868, Flint v. Pierce, 99 Mass. 68, 96 Am. Dec. 691, infra, p. 1174; 1887, Hazeltine v. Belfast R. Co., 79 Maine 411, 1 Am. St. Rep. 330; 1897, Wells v. Black, 117 Cal. 157, 59 Am. St. Rep. 162; 1899, Steiner v. Steiner L. & L. Co., 120 Ala. 128, 26 So. Rep. 494; 1899, State v. Citizens' Bank, 51 La. Ann. 426, 25 So. Rep. 318; 1902, Wuerfler v. Trustees, etc., 116 Wis. 19, 96 Am. St. R. 940.

1

Sec. 356. 4. Effect of by-laws.

SAMUEL FLINT v. JAMES PIERCE.'

1868. IN THE SUPREME JUDICIAL COURT OF MASSACHUSETTS. 99 Mass. Rep. 68-71, 96 Am. Dec. 691.

[Suit by Flint against Pierce for balance of a loan due on a note given in 1862 by a corporation of which Pierce was a member, and had signed a by-law providing that "The members of this association pledge themselves, in their individual as well as collective capacity, to be responsible for all moneys loaned to this association."]

WELLS, J. The note upon which this action is based is the contract of the corporation. The defendant is not a party to that contract; and the plaintiff does not seek, by this suit, to charge him upon any statute liability as a stockholder. Responsibility for the amount of the note is sought to be established through a by-law of the corporation, to which the defendant had attached his signature. This bylaw, with others, was adopted in 1831. To become a member of the association it was requisite to subscribe the by-laws. It does not appear that the defendant's signature was attached for any other purpose than to constitute him a member of the corporation. It does not appear, and is not alleged, that the plaintiff lent his money upon the faith or credit of the individual pledge contained in the by-law; nor that the by-law was in any manner made known to him, or to the public, as the basis of such credit.

1 Statement abridged. Arguments and part of opinion omitted.